'We Don't Frame System Of Money Transfers': Delhi High Court On PIL Seeking 'Uniform Banking Code' To Regulate Foreign Exchange Transactions

The Delhi High Court on Thursday directed the Union Government to treat as representation a public interest litigation moved by Advocate and BJP leader Ashwini Kumar Upadhyay, seeking implementation of a "Uniform Banking Code" for Foreign Exchange Transactions.

A division bench comprising Chief Justice designate, Justice Manmohan and Justice Tushar Rao Gedela directed the Centre to decide the plea after taking inputs from the Ministry of Home Affairs and the Reserve Bank of India by way of a speaking order, as expeditiously as possible

The court orally remarked that it cannot frame a system of money transfers as the same is the domain of experts like Reserve Bank of India or the Central Government.

“We can direct this petition to be treated as a representation to the RBI or MHA. This is not for the court to decide. We don't decide money transfers…. We don't frame a system of money transfers. Have you ever heard of any court framing a system of money transfers? These are unique applications which are filed in this court. This is not our domain. This is the domain of experts like RBI. They will decide this,” the bench said.

Upadhyay pointed out that there are "several loopholes" in the existing system of transfer of foreign funds in Indian banks which could be used by "separatists, naxals, and radical organisations to destabilise" the country.

On this, the court remarked, “No one has a magic wand that anyone can stop funding of any separatist organization. No one has that magic wand. You can control it. These transactions will get flagged and they'll be curbed. But you cannot say that no monetary transaction will take place. Otherwise you'll have to close all international monetary transactions for no crime to take place anywhere in the world. The policy will be made by the Ministry. Not by us.”

The bench further said: “Internationally have you heard of any court deciding the monetary transactions? No court in the world would have decided this…. We will not prepare a banking code. The ministry must do it. The RBI must do it.”

Justice Manmohan further remarked that Courts cannot devise a uniform banking code and that he has never heard of any court Internationally interfering in such a process.

“And there are so many complications in this pattern. There are international treaties. There is an organization with which they have entered into a transaction which is monitoring all the activities worldwide for terrorism. There is already a full fledged code,” he said.

The court further remarked: “There has to be confidence in the banking industry. There has to be confidence in our monetary transactions. If courts start doing this, people will lose confidence. There will be no investment in this country also….”

The bench observed that it neither has the wherewithal nor the expertise to prepare a uniform banking for foreign exchange transactions.

“Consequently, the present petition is directed to be treated as a representation to the Ministry of Finance who is directed to decide the same after taking inputs from the Ministry of Home Affairs and the Reserve Bank of India by way of a speaking order as expeditiously as possible,” it ordered.

In his plea, Upadhyay had submitted that money is transferred into Indian bank accounts by any foreign source by way of RTGs, NEFT, IMPS. He had urged that International Money Transfer is the only mode which should be permitted to be utilized for transfer of funds from foreign sources in Indian bank accounts as it will leave a stamp with regard to identify and source of the funds.

Similarly, Centre must make it compulsory to have Electronic Fund Transfer at Point of Sale (EFTPOS) or Mobile Phone Payment System (MPPS) for manufacturers, distributors, retailers and services providers to control black money generation, the plea argued.

It had also submitted that Foreign Inward Remittance Certificate (FIRC) must be issued and all International and Indian banks must send the link through SMS to get Foreign Inward Remittance Certificate automatically in case Foreign Exchange is being deposited in the account as converted INR.

As per Upadhyay, the reliefs sought in his plea would control the menace of bribery, black money, benami transaction, tax evasion, money laundering, profiteering, grain hoarding, etc.

It will also control mafias activities including land mafias, drug mafias, liquor mafias, mining mafias, gold mafias, transfer-posting mafias, betting mafias, hawala mafias, etc, the plea stated.

Case Title: Ashwini Kumar Upadhyay v. Union of India 

Citation: 2024 LiveLaw (Del) 1058